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Enlarge ImageRequest to buy this photoAP file photoSpecialists confer at the post that handles Herbalife on the floor of the New York Stock Exchange. Yesterday, Herbalife closed down nearly 4 percent.

NEW YORK — Accounting firm KPMG has resigned as the auditor for Herbalife, a dietary-supplements
maker, and Skechers, a shoe retailer, after a rogue partner allegedly leaked information about the
companies to someone who used it for insider trading.

KPMG said it has fired the partner and has no reason to think there were any problems with the
financial reports of the two companies. KPMG did withdraw its recent audit reports on both
companies because it felt its independence had been compromised.

KPMG didn’t reveal the partner’s identity.

However,
The New York Times reported that he is Scott I. London, the partner in charge of the audit
practice for KPMG in southern California. Federal authorities are investigating his alleged leaking
of secret information to a stock trader,
The Times said.

The newspaper said the information came from people with direct knowledge of the inquiry.

London, 50, could not be reached for comment. He had worked at KPMG for 29 years, according to a
profile on LinkedIn.

KPMG sought to distance itself from the partner. In its statement, the firm said: “This
individual violated the firm’s rigorous policies and protections, betrayed the trust of clients as
well as colleagues, and acted with deliberate disregard for KPMG’s longstanding culture of
professionalism and integrity.”

Investors knew something was wrong when Herbalife shares failed to open along with the rest of
the stock market yesterday morning. Skechers did open for trading, but that trading was halted
later in the morning.

The development comes at an awkward time for Herbalife. Activist investor Bill Ackman has
publicly attacked Herbalife, saying it is distorting the financial information it gives to
investors. His rival Carl Icahn has vehemently disagreed and has increased his stake in the
company. In February, the wrangling boiled over in public as Ackman and Icahn got in a shouting
match on live television.

Herbalife has disputed Ackman’s characterization of the company and says he wants to push the
stock down for his own benefit.

Timothy Ramey, an analyst at D.A. Davidson & Co., downgraded Herbalife to neutral from buy.
He noted that yesterday’s development was not Herbalife’s fault, and he said the fundamentals of
the business are unchanged. Still, he said, the KPMG development could cause “heightened risk and
volatility near-term.”

“We assume the process of hiring a new auditor will go quickly — maybe days or weeks,” Ramey
wrote. “However, the new auditor will have to perform its own audit and re-establish its own review
of financial controls. We estimate this process could take as long as a year — we guess HLF would
be lucky to file their 2013 10-K on time.”

Los Angeles-based Herbalife sells energy drinks and stress-management pills and recruits people
to work as independent sales staffers. On its website, it promises to “change people’s lives,”
either by the chance to sell Herbalife products or the chance to take them.